Biotech Values

[DewDiligence]

What I like about OCRX (aside from the very low enterprise value) is that the company’s drug, OCR-002, appears to be safe and it has an MoA (ammonia scavenging) that’s easy to understand and to measure. Hence, the question for investors is not so much whether the drug works, but rather is whether a clinical trial can be designed to demonstrate that.

I do have doubts about the design of the phase-2b trial in hepatic encephalopathy for the reasons mentioned in #msg-110961835; however, the final results of this trial are a pretty long way off and the stock could have a nice run in the meantime. Moreover, the interim analysis expected this quarter on futility and enrollment size may provide greater confidence in the ultimate outcome of the trial.

The release of the phase-2a IST data this week (#msg-110957753) triggered my purchase insofar as nothing really bad happened, reducing risk to some degree, and yet I was able to buy at the same share price as before the release.

Finally, please note that OCRX is a high-risk/high-return stock, and hence I intend to hold a relatively small position (compared to, say, ENTA).